For the local economy, the blow couldn’t have come at a worse time. This is usually when Kashmir sees around one-third of its total annual tourists. In FY25, J&K’s real Gross State Domestic Product (GSDP) stood at ₹1.45 lakh crore. Of this, tourism directly contributed around 7%, or approximately ₹18,550 crore, according to chief minister Omar Abdullah’s Budget speech. When factoring in allied services — hotels, transport, communication, trade, and food services — tourism’s indirect economic footprint balloons to nearly 29% of the GSDP, or ₹41,615 crore.

In a region where nearly 90% of industrial employment is driven by MSMEs, many of which depend heavily on seasonal tourist traffic, countless livelihoods are at risk. “The youth in Kashmir had made huge investments in the last one year seeing the growing demand, be it guides or local vendors or homestays, but now, with demand dropping massively, these are expected to be severely impacted,” says Gohar Rafiee, an official with J&K’s tourism department. “Some drivers took loans expecting a bumper tourist season… With bookings wiped out, they’re staring at defaults,” says Shaila.

The impact on infra

Tourism isn’t the only sector that has been hit. Kashmir has been at the centre of infrastructure development by the Union government in the past four to five years, witnessing a slew of connectivity projects across railways, highways, tunnels, ropeways and in sectors such as power and hospitality, among others. According to the Ministry of Statistics and Programme Implementation, the Centre is implementing about 50 projects with a capital cost of ₹76,000 crore.

The Narendra Modi-led government’s Kashmir outreach is based on ending its socio-economic alienation, with infrastructure being the core strategy. The Pahalgam attack, say experts, is meant to undermine India’s efforts and thwart economic development of the region. The attack will likely delay a key rail connectivity project — the Vande Bharat Express from Katra to Srinagar, which will provide high-speed connectivity between New Delhi and Srinagar.

Road connectivity, too, has been a key initiative in recent years. The Centre is developing a 670-km Delhi-Amritsar-Katra Expressway at a capital cost of ₹40,000 crore. The Ministry of Road Transport and Highways is also implementing tunnel projects. But with enhanced security concerns and the lack of adequate labour in the wake of the terror attack, project implementation may take a hit, say industry constituents, requesting anonymity.

Ropeway projects in the region, envisaged to boost tourism, are also likely to be hit hard, say experts. As many as 54 ropeway projects with investments of ₹2,000 crore are planned in the area. Plus, the government’s plan to bid out the projects on a PPP basis may take a massive hit. Hydropower projects of about 6,000 MW being built on the Chenab and Jhelum are also likely to be impacted.

The Brief: Kashmir

Pahalgam terror attack: Kashmir's tourism sees a big dip, but locals remain hopeful for a revival